Abandoned builds hit the market amid construction crisis
Soaring construction costs and mounting builder bankruptcies have turned these owners’ home dreams to a nightmare.
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A glut of unfinished homes has hit the market across Queensland, costing devastated owners millions as soaring construction prices and builder bankruptcies force them to start over. Abandoned construction sites include new homes close to completion and halted renovations.
Many of these properties are fallout from thousands of construction company collapses since last year, including major players like Porter Davis Homes, Probuild, and PPS Qld.
Others result from rising living costs, with owners unable to keep up with mortgage and rent payments while their dream builds stall.
One unfinished property at Mt Gravatt, bought for $600,000 in 2022, sold at auction for $1.02m in June. The double-storey house had slab, steel frame, plumbing and windows already in place, but the vendors couldn’t afford to finish it.
Nearby in Mt Gravatt East, a half-built house by failed builder Porter Davis described as “no more than a shell” also sold at a hotly contested auction with 34 bidders.
“Back in the day, no one would have wanted to look at that, but these days people can see the potential in a half-finished property in a good area,” Ray White agent Andrew Boman said. The property was purchased for $1.37m by Kustom Homes builder Vladimir Cosic, who finished it in three months and sold it for $1.92m.
In the regions, an abandoned three-bedroom kit home in Kooralbyn is listed for $500,000 and marketed as a “serious project with serious potential”.
“A lot of love and planning has gone into this property, but there is unfinished business. The ‘house’ requires all areas of fit-out but it’s watertight and lockable,” agent Kylie Rodwell said.
Another property outside Kilcoy, with a completed slab and piers and approved architectural plans available, is priced at $480,000.
Dr Bradley Hastings, of UNSW, said residential construction companies were collapsing at an alarming rate despite the urgent housing undersupply.
ASIC data shows 2,832 builder insolvencies in Australia in the 2023-24 financial year.
“[It is] a problem that is trending worse, not better,” Dr Hastings said.
“At a time of unprecedented need to build, construction companies are collapsing like houes of cards, leaving consumers with lost deposits and half-finished homes.”
Brisbane retirees Don and Sharon Rankin recently met with a real estate agent to discuss selling their shell of a home, after big delays spurred them to exit their build contract.
But the couple wants to stay in the area and worry they won’t be able to afford to buy back in as prices have soared in the past year.
“We can’t afford to lose this because we will have nothing,” Mrs Rankin said.
“I am a nervous wreck about the whole thing.”
Mr and Mrs Rankin, both aged in their 60s, paid $650,000 for a 405sqm block in bayside Manly in 2022, engaging Adenbrook Homes to build a double-storey four-bedroom house.
They say the slab was poured in August 2023 with the steel frame and roof up by Christmas, but despite assurances the house would be ready by July it was still not completed.
“It was 12 months from when we signed the contract even to get to lock-up stage, and then just delays, mistakes needing to be fixed, and excuses after excuses,” Mr Rankin said.
After seeking legal advice, Mr Rankin said he gave the builder two weeks to start work but claims, “they never showed up”.
“Nothing has been finished inside and the site has been abandoned since Christmas.”
The couple were this week awaiting settlement of their insurance claim, hoping it will cover the $350,000 they have outlayed on the project, as well as the $200,000 balance remaining to finish the build.
Mr Rankin has already resorted to selling his prized vintage record collection to offset a loss of about $45,000 including legal fees and rent.
“I couldn’t sleep at night with all the dramas,” Mr Rankin said.
“Everything started really well, they had a display home down at Newport Waters and the signing up process was very professional, but the delivery was terrible.
“As soon as we signed off everything went pear-shaped.”
Adenbrook Homes did not respond to questions about the case before deadline.
Rising labour costs, supply chain issues, and unprofitable fixed-price contracts have left projects in limbo and both homeowners and subcontractors struggling as unsecured creditors.
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Home building materials were up 34.5 per cent since 2019, and the cost of skilled trades has risen by 30.4 per cent, according to ABS data.
The Queensland Home Warranty Scheme mandates insurance for building work over $3,300, but cover is often limited.
Building commencements have hit 10-year lows in 2024, with the ratio of population growth to new dwelling approvals at its worst level on record.
Australia is building 15,000 fewer homes each quarter than needed to meet its 1.2 million new homes target by 2029.
The June 2024 quarter saw 44,853 homes built — an improvement from the previous year, but still well short of the 60,000 required.
“Although it is encouraging to see an increase in the number of completed homes, these figures show how far we have to go,” Property Council executive Matthew Kandelaars said.
“That new housing commencements are down is a particularly worrying sign and shows how fragile our housing pipeline is.
“We need to do everything, everywhere, all at once to boost housing supply.”
Master Builders Australia chief economist Shane Garrett said a 2.4 per cent uptick in detached house building approvals in September was a positive step towards recovery.
“Home building approvals seem to be finding some momentum, but the challenge of ending the housing crisis is still formidable,” Mr Garrett said.
“More action is still needed to bring down the high costs and timelines associated with building to encourage even more people into the new home building market.”
PEXA’s latest Property and Mortgage Insights reports show strong price growth in metro and regional areas.
“Growth in new housing supply has lagged behind demand,” PEXA chief economist Julie Toth said.
“New homes are taking longer and costing more to build than in the past. High labour and material costs have added to the rising price of new builds.
“These capacity constraints are pushing more buyers into the market for existing homes and pushing home prices higher.”
Originally published as Abandoned builds hit the market amid construction crisis
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